Tongling Nonferrous Metals Group, China's biggest smelter of copper, agreed to buy raw materials from PanAust Ltd's US$241 million project in Laos, signing the first long-term contract for the mine, which began producing in June.

Tongling agreed to buy 80,000 dry metric tons of copper and gold concentrate for four years through 2012, Brisbane-based PanAust said yesterday in a statement to the Australian Stock Exchange. The contract can be extended, with treatment and refining charges to be negotiated annually, it said.

"We will continue with our strategy of entering into a mix of long-term and spot sale agreements," Gary Stafford, managing director of PanAust, said in the statement. The mix will allow it to "capitalize on competitive treatment charges and refining charges in the currently tight market for copper concentrate."

Copper producers are earning less from smelting, as an oversupply of capacity in China and India and insufficient concentrate enabled mining companies to drive down so-called treatment and refining charges, Bloomberg News reported. PanAust has agreed to sales accords for 40 percent of output from the mine until 2010, it said.

PanAust jumped 12 percent to close at A$0.42 (US$0.30). The company has a market value of A$604 million.

(Shanghai Daily October 15, 2008)